Trading News
Sep. 5, 20236 min read

How to Trade Stocks With Breaking News

Tim BohenAvatar
Written by Tim Bohen

The moves that breaking news can create happen fast. 

But not all breaking news causes the same reaction. 

Sometimes news hits a stock and it spikes for a second then tanks. 

Other times it can spark multi-day runners. 

So how do you know which stocks will move on positive news and which ones won’t? 

Nobody knows the future. 

But there are tools you can use and things you can look for to give you an edge when trading stocks with Breaking News…

These four steps can help you find a potential trade and an entry point. 

It’s all about staying consistent with the things you look for before a trade and your approach. 

Here’s how…

How to Trade Stocks With Breaking News

First Wave BioPharma, Inc. (NASDAQ: FWBI) was a Breaking News Chat alert yesterday after the company received a patent for methods of treatment for COVID-19.   

The news dropped around noon Eastern so it was right in the middle of the trading day. 

The stock went on to gain a whopping 140%+ after the alert went out!

So how can you take advantage of moves like this that seem to come out of nowhere in the middle of the day?

I’ll show you how you can approach Breaking News Chat plays and a pattern to look for… 

How to Approach Breaking News Alerts and the Pattern to Look For

Step 1: Use the Right Tools

First, make sure you’re using a reliable breaking news chat service. 

These services send out alerts in premarket, during market hours, and even after hours. So, you’re always in the loop when big news drops.

I might be biased, but I think StocksToTrade’s Breaking News Chat is the best one out there — try it out here

I use it daily and it replaces multiple subscriptions I had and keeps everything in one place. That saves me a ton of time. 

Once you see breaking news hit the wires, here’s how you can approach a potential trade…

Step 2: Look For a Reaction

Remember, we’re not here to guess which stocks will react to news or find hidden gems that nobody knows about. 

We want to find stocks that are already spiking and look for high-odds setups that we can repeat. 

So when news hits, the first thing you want to see is a good reaction… 

You want to see a quick spike in the stock’s price with high trading volume. The spike and volume tell you that traders are interested, and that can mean a potential trade…

Step 3: Watch For Confirmation 

The trick to trading Breaking News Chat alerts is to not jump in right away. Patience is key in trading. 

We want to avoid jumping into a stock that ends up immediately failing.

So a good approach is to wait for the stock to pull back from its initial spike… 

This will show you if the stock can hold any of its gains and has the potential to continue higher, or if it’s going to fail.

If a stock can hold its gains on a pullback and starts to trend back up — that’s where it gets exciting. 

Here’s the pattern I would look for…

Step 4: Look For A Pattern And Entry

Remember what we look for in every premarket… We look for stocks moving on news that are trading a ton of volume and ideally have a low float. 

Then we look for a pattern… 

For trashy day one spikers that’s usually a dip and rip.

And that’s the same thing you can look for in stocks with news alerts during midday… 

You want to see that the stock can spike, but also that it can hold up and continue higher. 

Let’s look at yesterday’s winning Breaking News Chat alert as an example… 

The stock had COVID news which we’ve seen move stocks recently since it’s back in the mainstream news headlines… 

Plus, it has a low float of fewer than 10 million shares and traded in high volume at the time of the alert. 

After the initial spike on the news, it pulled back and consolidated around VWAP. Then it broke through the high from that initial spike and continued to run for almost an hour. 

FWBI chart: 1-day, 1-minute candle — courtesy of

That’s the kind of setup you want to look for.

Final Thoughts

Trading stocks with breaking news can be thrilling, but it’s not without risks. 

Always have a full trading plan with a risk level and a goal. You can use VWAP or the low of consolidation as your risk. And have a goal of two or three times your risk. 

And you can always practice this strategy in a paper trading account before risking real money.

StocksToTrade lets you paper trade and get Breaking News alerts with our Breaking News Chat add-on. 

Try it now for 14 days and see what stock you’ll get alerted to next

Have a great day everyone. See you back here tomorrow. 

Tim Bohen

Lead Trainer, StocksToTrade